Haliburton and the Military-Industrial Complex

I heard Jane Mayer on NPR this morning talking about her piece in The New YorkerContract Sport: What did the Vice-President do for Halliburton? To be honest, I don’t think I’d ever heard of the company until the 2000 campaign when it turned out that Dick Cheney had been heading it since retiring as Bush 41’s SECDEF. I was surprised to hear how long the company has been around doing precisely the kind of work it’s now doing in Iraq.

Halliburton has become a favorite target for Democrats, who use it as shorthand for a host of doubts about conflicts of interest, undue corporate influence, and hidden motives behind Bush Administration policy—in particular, its reasons for going to war in Iraq. Like Dow Chemical during the Vietnam War, or Enron three years ago, Halliburton has evolved into a symbol useful in rallying the opposition. On the night that John Kerry won the Iowa caucuses, he took a ritual swipe at the Administration’s “open hand†for Halliburton.

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Defenders of Halliburton deny that it has been politically favored, arguing that very few other companies could have handled these complex jobs. As Cheney said last September on “Meet the Press,â€Ã¢€œHalliburton is a unique kind of company. There are very few companies out there that have the combination of very large engineering construction capability and significant oil-field services.†Dan Guttman, a fellow at Johns Hopkins University, agrees with Cheney’s assessment, but sees Halliburton’s dominance as part of a wider problem—one that has reached a crisis point in Iraq. After years of cutting government jobs in favor of hiring private firms, he said, “contractors have become so big and entrenched that it’s a fiction that the government maintains any control.†He wasn’t surprised that Halliburton’s admission of wrongdoing in Kuwait had failed to harm its position in Washington. “What can the government say—‘Stop right there’?†Guttman said of Halliburton. “They’re half done rebuilding Iraq.â€

The Vice-President has not been connected directly to any of Halliburton’s current legal problems. Cheney’s spokesman said that the Vice-President “does not have knowledge of the contracting disputes beyond what has appeared in newspapers.†Yet, in a broader sense, Cheney does bear some responsibility. He has been both an architect and a beneficiary of the increasingly close relationship between the Department of Defense and an élite group of private military contractors—a relationship that has allowed companies such as Halliburton to profit enormously. As a government official and as Halliburton’s C.E.O., he has long argued that the commercial marketplace can provide better and cheaper services than a government bureaucracy. He has also been an advocate of limiting government regulation of the private sector. His vision has been fully realized: in 2002, more than a hundred and fifty billion dollars of public money was transferred from the Pentagon to private contractors.

According to Peter W. Singer, a fellow at the Brookings Institution and the author of “Corporate Warriors,†published last year, “We’re turning the lifeblood of our defense over to the marketplace.†Advocates of privatization, who have included fiscally minded Democrats as well as Republicans, have argued that competition in the marketplace is the best way to control costs. But Steven Kelman, a professor of public management at Harvard, notes that the competition for Iraq contracts is unusually low. “On battlefield support, there are only a few companies that are willing and able to do the work,†he said. Moreover, critics such as Waxman point out that public accountability is being sacrificed. “We can’t even find out how much Halliburton charges to do the laundry,†Waxman said. “It’s inexcusable that they should keep this information from the Congress, and the people.â€

Unlike government agencies, private contractors can resist Freedom of Information Act requests and are insulated from direct congressional oversight. Jan Schakowsky, a Democratic representative from Illinois, told me, “It’s almost as if these private military contractors are involved in a secret war.†Private companies, she noted, can conceal details of their missions from public scrutiny in the name of protecting trade secrets. They are also largely exempt from salary caps and government ethics rules designed to protect policy from being polluted by politics. The Hatch Act, for example, forbids most government employees from giving money to political campaigns.

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Halliburton̢۪s construction-and-engineering subsidiary, Brown & Root Services, started working with the U.S. military decades before Cheney joined the firm. Founded in Texas, in 1919, by two brothers, George and Herman Brown, and their brother-in-law, Dan Root, the firm grew from supervising small road-paving projects to building enormously complex oil platforms, dams, and Navy warships. The company̢۪s engineering feats were nearly matched by its talent for political patronage. As Robert A. Caro noted in his biography of Lyndon Johnson, Brown & Root had a symbiotic relationship with L.B.J.: the company served as a munificent sponsor of his political campaigns, and in return was rewarded with big government contracts. In 1962, Brown & Root sold out to Halliburton, a booming oil-well construction-and-services firm, and in the following years the conglomerate grew spectacularly. According to Dan Briody, who has written a book on the subject, Brown & Root was part of a consortium of four companies that built about eighty-five per cent of the infrastructure needed by the Army during the Vietnam War. At the height of the resistance to the war, Brown & Root became a target of protesters, and soldiers in Vietnam derided it as Burn & Loot.

There’s quite a bit more in the piece, but you get the idea.

I must admit, outsourcing a large chunk of overseas military operations does raise some interesting command and control issues. This is especially true when most of the work goes to a conglomerate, since it’s difficult to fire it when its subidiaries and subcontractors are found to have engaged in multiple irregularities. But I’m guessing that maintaining this capability in the government sector would be prohibitively expensive, since we would have to pay for it whether we need it at the moment or not.

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James Joyner
About James Joyner
James Joyner is Professor and Department Head of Security Studies at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. McGehee says:

    If it isn’t done in-house, a conglomerate is pretty much going to be it. Not too many mom-and-pop operations would have the capability, and if one did, the profit potential would almost guarantee they were bought out, or competed out of business.

  2. James Joyner says:

    Could be. One would think that companies the size of KBR could make it on their own, but that’s just intuition on my part. I’ve honestly got no idea of the finances of anything of this scale.

  3. Paul says:

    KBR could make it one their own. They would just be smaller. They are big because the government needs a lot of work done. If the government got out of the business, the company would shrink.

    As McGehee points out, you gotta be a mega-company to do multibillion dollar ops.

    The reality is that when Halliburton is working for LBJ or getting no bid contracts from Clinton there is nothing wrong with them. When a republican is in office they are satan.

    Halliburton has made a 6% profit on everything they have done in Iraq and been cleared of the wrongdoing the critics invented.

    The only people who believe the Halliburton stuff are the ones who believe Gore won Florida. Short of commitment to a mental facility for their hallucinations, I’m not sure how to disabuse them of the notion.

  4. James Joyner says:

    Paul,

    I’m not worried about the political corruption angle. The problem is that, by taking it private, there’s much less congressional oversight of the cash flow.

    And there have been a couple of instances that I’m aware of where KBR and other subsidiaries engaged in fraudulent billing.

  5. Paul says:

    That argument is not completely without merit but there is more to it.

    Contractors like KBR and others go thru a strong auditing process at the end of a contract. This is the same for many other vendors such as in the space program. That gives the oversight.

    This auditing system is not a “perfect system” but there is no way to bid a job when the scope of work is unknown.

    Realistically the government needs these services. To do them “in house” would be a disaster of monumental proportions for the reasons you mention. Getting a contractor to do it and then auditing the bill is about as good a system as you can get.

    Indeed, the system seems to function just fine except when Republicans are up for reelection.

  6. Gregg says:

    Does Dick Cheney still have any legal connection to Haliburton, does he still make money off their profits? What are your sources for the answer to this.

    Thank you.

  7. James Joyner says:

    Huh? There’s a whole article linked in the post. It really has little to do with Cheney.

  8. David B Ryerson says:

    Can any one tell me how to contact Haliburton Refto:employment oppertunities over seas?
    If you can pls contact at tdriver_1_2003@yahoo.com